These developments come on the back of significant momentum for application programming interfaces (APIs) and real-time payments, which have proliferated worldwide – prompting a knock-on effect for liquidity.

“Real-time clearing and settlement mechanisms, which will become quite distinct from the familiar territory of cut-off times, end-of-day processing, and periodic updates to intraday liquidity positions, will have a fundamental impact on liquidity and collateral management,” says Vanessa Manning, Head of Liquidity and Investment Solutions, Global Transaction Banking, Deutsche Bank. “For example, the way that banks calculate their intraday liquidity buffers is currently based around end-of-day batch processing, and does not necessarily reflect the different risks associated with real-time flows and dynamic intraday liquidity due to the speed of liquidity changes and associated counterparty exposures.”

Consequently, if the industry is to reap the benefits of real-time liquidity management, banks will need to transform their clearing and settlement architecture, help corporates develop their own real-time-ready systems, and collaborate with TMS and ERP vendors to ensure complete end-to-end efficiency of operational processes.

“The first step to achieving real-time liquidity capabilities will be industry-wide conversation, be it through forums, advocacy or continued dialogue with regulatory bodies”, says Manning. “Only then will the industry be able to collectively define the standards and best practices that will shape the next generation of liquidity and collateral management.”